Faissal Mouhamad Professional Corporation ("FMPC"), which operates dental clinics in Red Deer and Calgary, Alberta, and 52 Dental Corporation and Delta Dental Corp., which manage the Red Deer and Calgary clinics' business operations, were placed in interim receivership on August 23, on application by RBC, owed approximately $3.1 million. RBC has become increasingly concerned that funds have been diverted from and payments have been made by FMPC to other corporations owned by Faissal Mouhamad, the principal of the companies, contrary to the terms of the credit facilities and the security granted to RBC. FMPC is also in default of the credit facilities and the security in that, among other things, it has failed to repay all amounts owing to RBC on demand, is not conducting day-to-day banking at RBC, has changed the ownership structure of the companies without giving RBC prior written notice and has failed to notify RBC of certain litigation against it. MNP was appointed interim receiver. Counsel is Miller Thomson for RBC and McMillan for the interim receiver.
Big Bear Energy Rentals Ltd., a Sylvan Lake, Alberta-based service company operating in the Western Canada oil & gas and civil engineering industries, along with certain other related companies including Barricade Environmental Ltd. with operations in Wyoming, North Dakota and Texas, was placed in interim receivership on January 21 on application by Canadian Western Bank ("CWB"), owed approximately $10.3 million. Business Development Bank of Canada (“BDC”) is also owed approximately $9 million with respect to an equipment loan. Upon its appointment, the interim receiver found what it described as an accounting department plagued with departures and leaves. The company's accounting manager had recently taken a medical stress leave which, according to an email uncovered by the interim receiver, was due to “the directive by upper management of the manipulation of the Big Bear & Barricade financial statements, and the deterioration of respect and leadership with the accounting team …” The interim receiver's initial report further notes that the accounting manager advised that she would typically be instructed by senior management to post unsupported accounts receivable and accounts payable transactions, resulting in higher borrowing values, which allowed the company to draw larger amounts under the CWB facility. She advised that this was also done with the company’s previous banker. According to the interim receiver, it has uncovered $5.9 million in receivables that have been confirmed by accounting personnel to be fictitious, $1.5 million in backdated invoices and $2.3 million in payables which accounting personnel have confirmed to be fictitious and posted to keep the company's profit margin in line with historical financials. Alvarez & Marsal is the interim receiver. Counsel is Miller Thomson for the applicant, BLG for the interim receiver, Cassels for BDC and DLA Piper Canada for Big Bear and related companies. By Dina Milivojevic
Otso Gold Corp., a BC-based mining company focused on acquiring and developing prime resource assets such as gold and copper in safe harbour jurisdictions, was placed in receivership on an interim basis on January 14, on application by the company's largest creditor, Pandion Mine Finance, owed approximately $31 million. At the time, the company was subject to CCAA proceedings, having sought protection after the company's former CEO and others were discovered to have allegedly committed embezzlement and fraud in connection with the company's assets. Pandion brought a receivership application, arguing that, among other things, the CCAA proceedings were eroding Pandion's collateral. The company opposed, arguing that, among other things, Pandion had not delivered notice under s. 244 of the BIA and that, as a consequence, was only entitled to the appointment of an interim receiver under s. 47 of the BIA. The company also argued that the amount of Pandion's debt was not as claimed. The Court granted the interim receivership order, which is to remain in force until the release of the reasons for decision on the receivership application. Deloitte was appointed interim receiver. Counsel is Farris for the company, BLG for the interim receiver and Cassels for Pandion. By Dina Milivojevic
Norman Prior Nodwell, who operates a mixed farming operation near Biggar, Saskatchewan, had an interim receiver appointed over all of his livestock, forage and feed on October 14, on application by BMO, owed approximately $2.2 million. On September 29, the Animal Protection Services Branch of the Government of Saskatchewan issued a Corrective Action Order against Mr. Nodwell, requiring him to provide his livestock with supplemental feed to improve the livestock's body condition and to humanely euthanize or provide veterinary care to distressed animals. On October 6, an agent of BMO inspected the farm and discovered that the bison are in poor condition, Mr. Nodwell had recently euthanized a number of bison, Mr. Nodwell does not maintain an inventory of his cattle and bison, Mr. Nodwell's bison are unmarked and unidentifiable and Mr. Nodwell's pastures are in extremely poor condition. Deloitte was appointed interim receiver. Counsel is MLT Aikins for BMO and Cuelenaere LLP for Mr. Nodwell.
Mill Street Ventures GP Ltd., the owner of a property located at 305 Mill Street, Angus, Ontario (the "Property"), had a receiver appointed over the Property on September 10. The Property consists of 5.3 acres of vacant land being developed into a 45,600 square foot mixed use office and retail plaza. Rosen Goldberg which has been the interim receiver of the property since April 20, is now the receiver. Counsel is Dickinson Wright for the receiver, Blaney McMurtry for Dorr Capital Corporation, Devry Smith Frank for DUCA, Jaffe & Peritz for the company and Lax O’Sullivan for Rescom.
Alaska - Alberta Railway Development Corporation ("A2A Rail"), which intended to build a new railway connecting northern Alberta to Alaska, was placed in interim receivership on July 12 on application by PwC, in its capacity as receiver of A2A Rail's main lender Bridging Finance. A2A Rail, along with two related numbered companies and shareholder Sean Frederick McCoshen, had previously filed NOIs on June 18 after PwC issued demands for the repayment of the approximately $212.9 million owed to Bridging. PwC has advised that it will not support any proposal put forward by the debtors and, given its concerns with respect to the improper use of advances under the loan, wants the assets of the debtors to be placed under the care and control of a court officer. MNP was appointed interim receiver of A2A Rail and bankruptcy trustee of the numbered companies, which, along with McCoshen, were deemed bankrupt on July 12 (Editor's note: last week we mistakenly wrote that A2A Rail was also deemed bankrupt - it was not, but rather had its proposal proceedings extended). Farber is the trustee of McCoshen's bankrupt estate. Counsel is TGF and McLennan Ross for PwC, Lawson Lundell for MNP and MLT Aikins for Farber.
Alaska - Alberta Railway Development Corporation ("A2A Rail"), which intended to build a new railway connecting northern Alberta to Alaska, was placed in interim receivership on July 12 on application by PwC, in its capacity as receiver of A2A Rail's main lender Bridging Finance. A2A Rail, along with two related numbered companies and shareholder Sean Frederick McCoshen, had previously filed NOIs on June 18 after PwC issued demands for the repayment of the approximately $212.9 million owed to Bridging. PwC has advised that it will not support any proposal put forward by the debtors and, given its concerns with respect to the improper use of advances under the loan, wants the assets of the debtors to be placed under the care and control of a court officer. MNP was appointed interim receiver of A2A Rail and bankruptcy trustee of the numbered companies, which, along with McCoshen, were deemed bankrupt on July 12. Farber is the trustee of McCoshen's bankrupt estate. Counsel is TGF and McLennan Ross for PwC, Lawson Lundell for MNP and MLT Aikins for Farber.
Upwood Park & Salvador Del Mundo Co-operative Homes, a social housing property located at 298 Queens Drive, North York, Ontario, was placed in interim receivership pursuant to the Housing Services Act on July 16. BDO was appointed interim receiver by the City of Toronto and is tasked with stabilizing the operations of the co-op.
Eveley International Corporation, a Stoney Creek, Ontario-based company that manufactures and sells undercarriage components for vehicles, was placed in interim receivership on April 23 on application by Canadian Equipment Finance & Leasing ("CEFL"). In April, as a result of the company being substantially behind on rent payments to 256 Ontario Inc., it was locked out of its leased premises. In response to this lockout and the subsequent cessation of the company's business, CEFL sent the company a demand letter and notice of intention to enforce security. msi Spergel (GRIP) was appointed interim receiver. Counsel is Aird & Berlis for the interim receiver, GSNH for the applicant, Camelino Galessiere for the company, and Chaitons for 256 Ontario Inc.
IEC Ltd., Audeamus Capital Corp. and certain other entities related to the Strategic Group, one of Calgary, Alberta's largest real estate companies, had their properties placed in interim receivership on application by a group of the companies' lenders. The companies obtained protection under the CCAA on December 10, attributing their financial difficulties to the extended slump in the Canadian energy market and its effect on the Calgary real estate market. The companies' request to be granted creditor protection past the initial 10-day stay was opposed by the applicants in part on the basis that they no longer had confidence in the management of the companies and wanted a receiver appointed to safely manage and preserve the properties, ensure rents are collected and not co-mingled amongst the various companies and ensure operational expenses are paid by the appropriate companies. Alvarez & Marsal was appointed interim receiver. Counsel is McCarthy Tétrault for the company, Dentons for the interim receiver, Norton Rose Fulbright for the CCAA monitor Hardie & Kelly, BLG for BMO and certain other lenders, Blakes for Sun Life, Cassels for MCAP and BDC, McMillan for RBC, McLennan Ross for CWB, Brownlee for Canada ICI and SBI Canada Bank, Lawson Lundell for Vancity Community Investment Bank and Centurion Mortgage Capital Corporation, Fasken for Fiera, Torys for Connect First Credit Union, Gowling WLG for CIBC, Stikeman Elliott for IMC and Computershare, Osler for TELUS Pension Master Trust, Bennett Jones for Trez Capital and Parlee McLaws for Equitable Life.